Johnson & Johnson: Evaluation Valentina rinCON B

OVERVIEW

  • Founded in 1886 by the Johnson Family in New Brunswick, N.J.
  • IPO in 1944
  • DID YOU KNOW? J&J initial stock price: $37.50
  • As of April 13th, 2017: Stock price 124.99
  • Products offered: Baby care, beauty, health and healing products, medical devices, and pharmaceutical products.

FINANCIAL STABILITY

  • Strong liquidity: current assets -excluding inventory- double current liabilities (average 1.755 times)
  • Strong ability to cover financial obligations: Times interest earned (32.73 times in 2015), Debt to total assets ratio (0.450).
  • High company value: EPS (5.559), ROA (11.55%), ROE (21.66%), P/E (18.07). Compared to its main competitors: EPS (1.3621), ROA (4.26%), ROE (10.35%), P/E (30.17).
  • Great stability in the use of their assets, liabilities, and equity with changes of less than 1%.
  • Higher cash flow than its competitors
  • Constant dividends since 1997 with a rising trend

GROWTH IN THE NEXT YEARS

  • Higher expected sales
  • Growth faster than the industry
  • Cash flows used for investment in research and development of new products
  • Restructuring plan for the next two years
  • Diversification in many products, not only the pharmaceutical sector
  • Future acquisitions

OBSTACLES:

  • Competition
  • International exposition

REFERENCES

Johnson & Johnson. (2015). Form 10-K 2015. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml

Johnson & Johnson: Dividend History. (n.d.). Retrieved from http://www.investor.jnj.com/dividends.cfm

Johnson & Johnson: Annual Report 2015. (2015). Retrieved from http://2015yearinreview.jnj.com/sites/2015yearinreview.jnj.com/files/2015-JoJohnson & Johnson. (2015). Form 10-K 2015. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml

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